Gold supported by ongoing societal unrest

Platinum started with a $1 gain this morning, quoted at $1,830.00 the troy ounce, while palladium retreated by $3 to the $836.00 per ounce mark. Rhodium offered nothing to get excited about as it remained at $2,430.00 for another trading day. Crude oil also remained largely static, marking time at the $85-per-barrel level, while the Dow showed lethargic trading action and was hovering near 12,280 at last check.

Finally, we have had some “straight-setting” of the “record” in the silver market. Much bullion dealer and newsletter-driven hype about silver investment item shortages, backwardation in silver, and such, has been on display in various forums and blogs. It turns out that, to the extent there is any tightness in supplies of certain silver products, “they are limited to higher purity metal in specific forms and locations, at most.”

The findings by New York-based metals research and consultancy firm CPM Group (a firm that ought to know a few things about silver given its extensive silver-producing clientele) noted that “there is talk in the market of shortages of 100-ounce investment-sized bars and coins, but its investigations dispute this.” CPM Group said it surveyed three bullion dealers in the first week of February about the supply of these metals. Conclusion: You want to buy silver? You can do so, and with relative ease. Just bring lots of dough…

CPM researchers found that “There were hundreds of thousands of ounces in 100-ounce bars available for immediate delivery, and NWTM said it was steadily producing more each day.” CPM added that “the rest [of the “urban myths” regarding silver “tightness” and exclamation marks regarding backwardation] is noise.” Nothing new. At all.

Something that was new this morning, on the other hand, were the fourth quarter 2010 and full-year 2010 gold market supply/demand statistics, as provided by the World Gold Council. We will let other tea leaf readers highlight all of the positives (which they certainly will) but continue to focus here on some of the under-the-hood realities which no level-headed gold investor ought to let be swept under the rug at this (price) juncture. The gold market remains in a potentially precarious situation if one does take all notable factors into account.

To wit: During 2010 (a year during which we were constantly bombarded with declarations of ‘record’ investment demand) it turns out that global…investment demand [such as bars, coins and exchange-traded products] was labeled as “more or less stable,” dipping 2% to 1,333 metric tonnes.

However, the net tonnage differential between 2009 and 2010 for the entire investment demand category shows a clear contraction on the order of 14.3% - more than 271 tonnes lower. Demand for gold in exchange-traded-fund (ETF) and similar products however, came in at only 338 metric tonnes last year, and it was down 45% from the previous year. Will you read about that in the next installment of your “How to Survive TEOTWAWKI” newsletter? Doubtful.